Citigroup (C) has officially priced the IPO of its spinoff of Primerica.

At $15 per share, the pricing went strong.

Warburg Pincus will pick up 22% to 33% of shares and Citigroup will retain 32% to 46% of equity, which it will divest after Primerica begins trading.

But will investors buy Primerica's stock?

That depends if they can figure out what Primerica actually does first.

What Does Primerica Do?

They'll deny it, but basically, it's a multi-level marketing (MLM) company for finance.

Primerica employs, according to their prospectus, over 100,000 representatives who go out and sell financial products like term life insurance, mutual funds, life insurance, and annuities. Almost all the products offered by Primerica are from Citigroup, its corporate parent.

All the mutual funds and annuities are sold through Primerica's licensed broker/dealer subsidiary, PFS Investments.

The goal is for the rep to push these products in a "warm market," which includes your family and friends who you'd be more comfortable selling to.

The rep receives a commission for these sales and his recruiter, recruiter's recruiter and so on all receive a portion of the sale.

Reps are encouraged to recruit more people to continue bringing in sales and revenue. All this information can be found in the "Business" section of the prospectus, beginning on page 104.

Higher ups who run district sales offices are called RVPs or regional vice presidents. They make significantly more money.

Know why?

Primerica employs an 11-tier upside system in which you get a kickback of commissions from your recruits, your recruit's recruits, and so on up until the 11th level. (This information can be found on page 112 of the prospectus.)

It takes about 10-seconds of Googling to reveal that there is widespread skepticism towards the company's business model.

Primerica is Multi-Level Marketing No matter how many times representatives of Primerica say that the company is not an MLM, that doesn't change the fact that it is. The company's website says (bold added by me): Personal Income: Primerica has more than 100,000 representatives. Actual gross cash flow is, among other factors, dependent upon actual organization size, the number of sales and the override spread on each sale, and the ability and efforts of you and your downlines. There is no guarantee that you will achieve any specific cash flow level. Commissions are subject to deferred compensation account withholding and applicable taxes. RVPs are responsible for their own business expenses and pay for all office expenses for their base shop representatives. The Company may from time to time modify, supplement or terminate any compensation program in any manner. Further details are available from Primerica Financial Services, Inc.No Inventory to Buy If you can get a Primerica supporter to admit that the company is an MLM, the next argument is that it's not "bad" like other MLMs. They don't have inventory frontloading like MLMs that are product-based. That's true, but that doesn't mean that Primerica is immune from abuse of representatives.

Primerica Financial Services is a financial services company that is structured through the MLM business model. Representatives can earn either by selling various financial products and services like life insurance, mutual funds, variable annuities, segregated funds, loans, long-term care insurance and pre-paid legal services or by actively recruiting more representatives to do the same and get a commissions from their sales. Using an MLM business model to sell financial services might draw some criticism, but so far, it has paid off well for Primerica.

So... How to Get A Job At Primerica

How does one become a sales rep? Good question.

We spent several days calling local Primerica "offices," which are just people's apartments and homes and a cellphone number linked to that address. None of the numbers in Manhattan or Queens worked, so we called Mark Supic, Primerica's Executive Vice President of Corporate Relations who works at the company's headquarters in Duluth, Georgia. Mr. Supic said he could not comment on anything due to the quiet period related to the IPO filing. So we asked Mr. Supic how we could go about finding a local sales representative. He told us to "look through the white pages or use MSN white pages."

Financial Details

Whatever your opinion of Primerica, you can't ignore that it's a real company.

In 2009 alone Primerica did $2.22 billion in revenue. Here are some basic facts about the state of the company's finances as found in the S-1 filing, page 14:

Revenue in 2008 was $2.19 billion with net income of $167.6 million; 2007 saw revenue of $2.39 billion and net income of $593.6 million.

Growth has essentially been flat over the past three years.

Most of Primerica's revenue is derived from direct premium payments.

Term life insurance is Primerica's best selling product.

$300 million of revenue was drawn in 2009 from investment and savings products.

2009 saw sales commissions of $34.3 million.

Below is a chart showing Primerica's corporate structure after the IPO.

Primerica

Where Have All The Sales Reps Gone?

Unable to find a local sales representative to speak with, we hit the Internet and scoured around for first-hand accounts of Primerica.

This message on Scam.com purporting to come from a company rep explains offers some first-hand perspective. He writes first hand detailing how Primerica's compensation system works:

I could go on forever about my experience with Primerica. So instead of detailing conversations and experiences I will do what no one at my base shop, and no person to ever attack or defend Primerica, has done. I'm going to lay out some FACTS and hopefully these FACTS will ANSWER some QUESTIONS: 1. In the month of February 2007, Primerica recruited 16,500 people at $199 a piece. The $199 is supposed to be used for a background check, and the Group 1 Life/Health Licensing process. Any current or former representative will tell you that there is a "formula for success" in regards to recruits; For every 10 people you recruit, 6 will quit and 4 will pursue their life license. Of the 4 that pursue 1 will fail the test and quit, 1 will pass the exam and never sell insurance, 1 will pass, do 2-3 transactions and quit and 1 will become a "success." So, for every 10 recruits, 7 do nothing with the $199. Let's do a little bit of math for the month of February. 16,500 divided by 10 is 1650. There are 1650 groups of 10. According to the "formula of success" 7 out of the 10 will not use the $199 they paid. 1650 multiplied by 7 is 11,550 people who did not use their $199 fee for licensing. 11,550 times $199 is $2,298,450. The goal for March is 30,000 recruits. 30,000 divided by 10 is 3000 times 7 is 21,000 times $199 is $4,179,000. In one month off of recruits alone Primerica made enough to pay the "guy on the CD who makes 2 Million Dollars a year" his money for the year and some change. Can people get refunds? Absolutely. I am in the process of getting three of them right now. After the initial three to four days of processing your $199 loses $40 of value for background checks which actually only cost $20. The other $20 is said to be an administration fee. So in February, had everyone who didn't go after their Group 1 Life/Health license received a refund of $150, Primerica still profited $20 times 11,550 or $213,000. Recruit. Recruit. Recruit.

Primerica asks their reps for quite a bit. Becoming a Primerica rep requires you to pay a $199 (now $99) fee and highly recommends paying a $25-a-month fee for access to Primerica Online as noted on page 108 of the prospectus. 100,000 reps times $25 a month equals $2.5 million a month from its own employees.

Of course, Primerica has a response

When you visit Primerica.com, you're greeted with a lack of information and no way to find a local representative in your area. Furthermore, a blog setup by the company at AskPrimerica.com features a post with a video entitled "Primerica Scam: The Real Picture." In this official blog post, Primerica attempts to defend itself by telling a sob story from the point of view of a current employee. The employee then speaks briefly in a video (embedded below) in which he talks about how Primerica is such a great "opportunity" and yet, never explains what the actual opportunity is.